A homeless man sleeps at the entrance of a closed store with posters reading ''No'' in central Athens Monday. Greece's Finance Minister Yanis Varoufakis has resigned following Sunday's referendum in which the majority of voters said "No" to more austerity measures in exchange for another financial bailout. Photo: AP

Stunned European leaders called a summit for Tuesday to discuss their next move after Greeks rejected the conditions of a rescue package from creditors, throwing the future of the country's eurozone membership into further doubt and deepening a standoff with lenders.

Greek Prime Minister Alexis Tsipras spoke by phone on Monday with Germany's Angela Merkel and agreed to present a Greek proposal for an aid deal at Tuesday's summit, a Greek government official said.

However, the German government said that it saw no basis for new bailout negotiations and insisted it was up to Athens to move swiftly if it wanted to preserve its place in the eurozone.

In Athens, thousands of jubilant Greeks waving flags and bursting firecrackers poured into the city's central square as official figures showed 61 percent of Greeks had rejected a deal that would have imposed more austerity measures.

"The referendum, though democratic in form, may not be of much value in future negotiations. Instead, it puts the Greek government in a dilemma - the EU cannot simply yield to the referendum results, which would be a bad example for other countries like Spain or Portugal," said Sun Keqin, a research fellow at the China Institutes of Contemporary International Relations.

Varoufakis resigns

Greece's outspoken finance minister Yanis Varoufakis resigned on Monday, which was believed to have suggested Tsipras is determined to try to reach a last-ditch compromise with European leaders.

Greece's top negotiator in aid talks with creditors, Euclid Tsakalotos, will be sworn in as the new finance minister, a Greek presidency source said.

Tsipras said Athens was returning to the negotiating table with the express goal of reopening banks which have been shut for over a week with the imposition of capital controls.

The European Central Bank's governing policymaking council held a conference call on Monday to discuss maintaining emergency funding for Greek banks at their current restricted level and avoid the drastic measure of yanking support, a likely outcome, people familiar with the matter said.

The IMF also said on Monday it was monitoring the situation in Greece and was ready to lend a hand if asked.

"The negotiation mechanism remains and will continue to serve both sides in spite of the enhanced difficulties to make compromises. The next round of negotiation will be crucial. If that collapses, Grexit might be inevitable," Sun said. 

Banking dysfunction

"After the 'big no,' it is now a race between two forces: political pressure for a deal, versus the impact of banking dysfunction within Greece," J.P. Morgan said in a research note. "Although the situation is fluid, at this point a Greek exit from the euro appears more likely than not."

Grexit would indicate a step back on the EU's single currency project and could break the European integration mechanism which the region has been pushing, as it would signal the possibility of dropping eurozone membership, said Zhang Bei, an associate research fellow at the China Institute of International Studies.

Unable to borrow money on capital markets, Greece has one of the world's highest levels of public debt. The IMF warned last week that it would need massive debt relief and 50 billion euros ($55 billion) in fresh funds.

Key to 'Belt, Road'

China on Monday expressed its hope that Greece would remain in the eurozone and believes the region can resolve its current problems appropriately, said foreign ministry spokesperson Hua Chunying at a daily briefing.

Chinese Premier Li Keqiang also said on June 30 that China and the world wanted to see Athens remain in the currency and that China would continue to buy eurozone debt.

"China holds some major overseas interests in Greece, including government bonds and investment projects in the country. Greece is also a key point in China's 'One Belt, One Road' initiative. China has always supported negotiation to keep Greece in the eurozone, which would otherwise pose a threat to China's interests," Sun said.

The weakened euro would also leave the dollar as the sole dominant currency in the global economy, which is against China's strategy of building a diversified world currency system and would give the US more leverage in global affairs, the Xinhua News Agency commented.

Global Times - Reuters